Shares of Nissan (OTC:NSANY) Motor fell again on Monday, marking a two-day loss of 13% amid concerns that the proposed joint holding company deal with Honda Motor Co (NYSE:HMC). might result in a less advantageous share ratio for Nissan investors.
Nissan's stock experienced a sharp fall of up to 6.7% in Tokyo trading. The drop followed a significant surge of over 60% since December 17, 2022, just before the announcement of the potential deal.
However, on December 27, 2022, the stock plummeted as attention shifted to the initial share ratio proposed for the Honda-Nissan partnership. The sell-off was also fueled by investors looking to secure profits in the final trading session of the year.
The troubled Japanese automaker announced on December 23, 2022, its intention to form and list a joint holding company with Honda by August 2026. While the precise details of the deal are still under negotiation, the share transfer ratio will reflect the stock prices of both companies. A December 27 report by Nikkei suggested a share ratio of 5:1 in favor of Honda.
Kazuhiro Sasaki, head of research at Phillip Securities Japan, noted that the selling pressure on Nissan shares could be attributed to investor disappointment over the anticipated share ratio, which was less favorable than some had hoped. He also mentioned that Nissan's financial health remains a concern for investors.
Despite the initial boost from the Honda deal news, sentiment towards Nissan is quite negative, according to Steven Holden, founder of Copley Fund Research. He pointed out that global fund positioning in Nissan is low, with little positive movement in terms of fund positions. Holden also identified Nissan as one of the significant underperformers in a global shift away from traditional automakers towards technology companies as the industry approaches 2025.
The broader Japanese stock market was also in a state of profit-taking on Monday, retreating after five days of consecutive gains the previous week.
The benchmark Topix index fell up to 0.8%, with the electronics and automotive sectors contributing to the decline. As of 3:24 p.m. in Tokyo, Nissan was the worst-performing stock on the blue-chip Nikkei 225 index.
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